Method and apparatus for multiple variable bidding in an online auction

ABSTRACT

A method and apparatus for automatically updating the value of a bid variable or the total bid for a multi-variable bid in an online auction is disclosed. The method includes displaying an automatically adjustable mechanism interfaced to a bidder. Thereafter, the automatic bid adjustments are calculated using the mechanism.

REFERENCE TO RELATED APPLICATIONS

This is a Continuation of application Ser. No. 09/753,329, filed Dec.29, 2000, now U.S. Pat. No. 7,383,206 which is a CIP of U.S. applicationSer. No. 09/282,157, now U.S. Pat. No. 7,249,085, filed Mar. 31, 1999and a CIP of U.S. application Ser. No. 09/252,790, now U.S. Pat. No.6,230,146, filed Feb. 19, 1999, which claims priority to U.S.Provisional Application No. 60/101,141, filed Sep. 18, 1998, and U.S.Provisional Application No. 60/110,846, filed Dec. 4, 1998, which arehereby incorporated by reference.

BACKGROUND OF THE INVENTION

1. Field of the Invention

The disclosed invention relates generally to conducting electronicauctions, and in particular to a method submitting multi-variable bidsinto an electronic auction.

2. Description of Background

Procurement of goods and services has traditionally involved hightransaction costs, especially information search costs. The advent ofelectronic commerce has introduced new methods of procurement that lowersome of the transaction costs associated with procurement. Electronicprocurement, in particular business-to-business electronic commerce,matches buyers and suppliers and facilitates transactions that takeplace on networked processors.

Four models of online procurement have been developed: catalog,buyer-bidding auctions, seller-bidding auctions and exchangemarketplaces.

The “catalog” model was an early form of online electronic procurement.Initially, electronic catalogs were developed primarily by sellers,typically suppliers, to help customers obtain information aboutproducts, and order supplies electronically. These first electroniccatalogs were single-source; i.e. they only allowed customers to obtaininformation and products from that supplier.

Although these first electronic catalogs greatly reduced the informationsearch costs associated with procurement, customers weredisadvantageously “locked in” to one supplier at each electroniccatalog. Customers were thus unable to compare a number of competingproducts in a single catalog. Therefore, certain suppliers withsingle-source catalogs began including competitors' products in theirsystems. The inclusion of competing products in electronic catalogsreduced procurement information search costs even further. By offeringcompeting products, electronic catalogs became “electronic markets”.

Many of these catalogs, however, are biased toward the supplier offeringthe electronic catalog, and it was thought that procurement costs couldbe lowered further through an unbiased market. Therefore, third-party“market makers” developed markets for many standard products andservices, which were intended to be unbiased markets. By having a marketmaker develop a market for certain products by offering an unbiasedelectronic catalog, procurement costs are further lowered by promotingcompetition between suppliers as well as reducing information searchcosts for buyers.

Electronic commerce using the electronic catalog model typicallyinvolves one buyer and one seller at a time. When many buyers competefor the right to buy from one seller, a buyer-bidding auction model, orforward auction is created.

In a forward auction, various goods or services may be simultaneouslyplaced for auction. As in an offline auction, bid prices start low andmove upward as bidders interact to establish a closing price. Typically,the auction marketplace is one-sided, with one seller and many potentialbuyers, although multiple-seller auctions are possible.

Catalog and buyer-bidding auction models, however, have limitations anddo not work in every situation. For example, it is difficult for asupplier to publish set prices in a catalog for custom products.Therefore, when a buyer requires a custom or hard-to-find product,pricing for that product typically will not be found in a catalog.Likewise, it is difficult to specify a custom product and identifybuyers who might use that custom product for a buyer-bidding auction.Additionally, there may be only one buyer interested in a customproduct, such that a buyer-bidding auction may not be applicable in allcases. Thus, there are fewer suppliers and no standard product andpricing information available for the buyer of custom industrialproducts.

Referring again to the cost of traditional procurement, and particularlyprocurement of custom products and services, when a company required acustom product, a buyer for the company would typically procure theproduct by searching for potential suppliers and then acquiring pricequotes from the potential suppliers for the needed custom product. Thesearch tended to be slow and random, and typically relied heavily onpersonal relationships. The costs associated with locating vendors,comparing prices, and negotiating a deal were therefore large. The costof switching suppliers is also very large, such that an incumbentsupplier's quoted price was most likely not the lowest price he couldoffer because the incumbent supplier knew the buyer would face switchingcosts to use another supplier. As an additional consequence, newsuppliers had a difficult time entering the market.

Therefore, supplier-bidding auctions for products and services definedor specified by a buyer have been developed. The assignee of the presentapplication has developed a system in which sellers downwardly bidagainst one another to achieve the lowest market price in asupplier-bidding auction.

Traditional online auctions have focused on price as the sole variableupon which the auction competition is based. In a typicalbusiness-to-business situation, however, many variables or parametersmay be considered in combination with a bidder's proposed price. Forexample, in the negotiations for a supply contract, a buyer will comparevarious proposals not only on the basis of price but also on the basison location of the supplier, contract term length, etc. In thesesituations, the sponsor has traditionally negotiated with each bidderindependently, as the bid prices do not account for these additionalvariables, and therefore cannot be readily compared.

The assignee of the present invention has developed a method oftransforming multi-variable bids into comparable units of measure inreal-time, as disclosed in copending U.S. patent application Ser. No.09/282,157, which has been incorporated by reference. This method oftransforming multi-variable bids allows for a competitive auction ofgoods and services that traditionally could not take advantage ofnatural auction dynamics. This process performs a transformationfunction on all of the variables or parameters of the bid to calculateone comparative bid.

In both forward and reverse auctions, the dynamics of bidding in anauction work to the advantage of the sponsor of the auction. Forexample, in a forward auction, bidders may bid more than they would havepaid otherwise for a product or service during the final “going, going,gone” stage of the auction because of the time pressure and excitementof the auction atmosphere, and the sponsor of the auction, in this casethe seller, benefits. Likewise, in a reverse auction, bidders may bidless than they would have bid on a supply contract outside the auction,and the sponsor, this time the buyer, benefits.

To take full advantage auction bidding dynamics, an electronic auctionshould facilitate bid entry. If the process of submitting a bid to theelectronic auction is difficult or cumbersome, the bidder may be lesslikely to make a bid. Additionally, in the final stages of an auction,bids are made very rapidly, and a bidder must be able to enter acompetitive bid quickly and easily in order to “beat the clock”.

Additionally, as discussed above, an auction may allow formulti-variable bidding. For example, in a reverse auction for customindustrial supplies, a bidder may be bidding both price and volume.Thus, it would be desirable to have a system that allowed a bidder toeasily and quickly change any aspect of his bid, not just price.

Therefore, what is needed is a method of entering and adjusting bidsthat allows the bidder to easily set or change any aspect of the bid andsubmit the bid into an electronic auction.

SUMMARY OF THE INVENTION

In accordance with one form of the present invention, there is provideda method for automatically adjusting the total bid value for a multiplevariable bid for an online auction, wherein said multiple bid variablesare fixed, and wherein the total bid value is calculated by performing afunction on the multiple bid variables. The method includes receivinginitial values for each bid variable; calculating an initial total bidvalue by performing the function on the bid variables using the initialvalues; receiving an updated value for one of the bid variables; andautomatically calculating an adjusted value for the total bid value byperforming the function using the updated value without any additionalinput.

In addition, in accordance with a further aspect, a method ofautomatically adjusting the value of an automatically adjustable bidvariable for a multiple variable bid for an online auction, wherein thetotal bid value for the bid is fixed, and wherein the total bid value iscalculated by performing a function on the multiple bid variables isdisclosed. The method comprises receiving initial values for each bidvariable; calculating an initial total bid value by performing thefunction on the bid variables using the initial values; receiving anupdated value for one of the bid variables; and automaticallycalculating an adjusted value for the automatically adjustable bidvariable using the function and the updated value.

In addition, in accordance with a further aspect, a method ofautomatically adjusting the value of an automatically adjustable bidvariable for a multiple variable bid for an online auction, wherein thetotal bid value for the bid is fixed, and wherein the total bid value iscalculated by performing a function on the multiple bid variables isdisclosed. The method comprises receiving initial values for each bidvariable; calculating an initial total bid value by performing thefunction on the bid variables using the initial values; receiving anupdated value for the total bid value; and automatically calculating anadjusted value for the automatically adjustable bid variable using thefunction and the updated total bid value such that the updated total bidvalue does not change.

Thus, the present invention provides a method and apparatus thatbeneficially encourages bidders to place bids.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 is a schematic illustration of the elements and entities involvedin an embodiment of an auction;

FIG. 2 is a tabular illustration of the tasks performed by the entitiesinvolved in the auction of FIG. 1;

FIG. 3 is a schematic illustration of the communications links betweenthe coordinator, the sponsor and the bidders in the auction of FIG. 1;

FIG. 4 is a schematic diagram of an auction network;

FIGS. 5A-5F illustrate several user-interfaces for setting theautomatically adjustable feature for bid variables in a multiplevariable bid, in accordance with various embodiments of the presentinvention;

FIG. 6 illustrates an example of a user interface for a bid that has bidvariables that can be configured to be automatically adjustable, andother bid variables that cannot be configured to be automaticallyadjustable; and

FIGS. 7A and 7B illustrate examples of a bid configuration interfacethat can be used to set several features of bid variable adjustment.

DETAILED DESCRIPTION

Reference will now be made in detail to the preferred embodiments of thepresent invention, examples of which are illustrated in the accompanyingdrawings. It is to be understood that the Figures and description of thepresent invention included herein illustrate and describe elements thatare of particular relevance to the present invention, while eliminating,for purposes of clarity, other elements found in typical auction systemsand computer networks. The present invention described below extends theoperation of the inventive auction systems and methods described ingreater detail in co-pending application Ser. No. 09/252,790, entitled“Method and System for Controlling Closing Times of Electronic AuctionsInvolving Multiple Lots” filed Feb. 19, 1999, the disclosure of whichhas been expressly incorporated in the present application.

In a reverse auction, bid prices start high and move downward as biddersinteract to establish a closing price. Typically, the auctionmarketplace is one-sided, with one buyer and many bidders, althoughmultiple-buyer auctions are possible. In a supplier-bidding reverseauction, bidders are potential suppliers bidding for the right to supplythe buyer, or sponsor of the auction, with the products or services inthe auction.

In a supplier-bidding auction for custom industrial parts, the productsbeing purchased are components or materials. “Components” may includefabricated tangible pieces or parts that become parts of assemblies ofdurable products. Example components include gears, bearings, andappliance shelves. “Materials” may include bulk quantities of rawmaterials that are further transformed into products. Example materialsinclude corn syrup and sheet steel. Services may also be purchased in areverse auction.

Industrial buyers do not typically purchase one component at a time.Rather, they tend to purchase whole families of similar components.Therefore, in a typical industrial supplier-bidding auction, productsare grouped together in “lots” for bidding. Each lot is composed ofseveral “line items”. In the auction, the suppliers are bidding onsupplying the buyer with everything within a lot. By lotting products,potential suppliers can bid on only that portion of the business forwhich they are best suited, and are not required to bid on every lot.This reduces some of the barriers to entry for new potential suppliersthat may only have capability to supply some of the needed products inthe auction. Reducing the barriers to entry also benefits the buyer asadditional bidders increase competition, and result in better biddingdynamics.

Typically, components in the auction are strongly related to oneanother. As an example, a buyer might purchase a given plastic knob intwo different colors, or might purchase a nameplate in four differentlanguages. These parts are so similar that by definition they must bepurchased from the same supplier—all of the knobs are made using withsame mold. These items will typically be grouped in a single “lot”. Asis known by one skilled in the art, there are many additional methods oflotting products for an auction.

Bidding in an auction with lots may be at the lot level or at the lineitem level. If bidding occurs at the lot level, bidders bid a price forsupplying every product or service in a lot. If bidding occurs at theline item level, bidders bid a price for each line item, and these lineitem bids are aggregated by the auction software into a lot-level bid.In either case, competition occurs at the lot level.

The basic process for a supplier-bidding auction as conducted by theassignee of the present invention is described below with reference toFIG. 1. FIG. 1 illustrates the functional elements and entities insetting up and conducting a typical supplier-bidding auction. FIG. 1Aillustrates the creation of an auctioning event, FIG. 1B illustrates thebidding during an auction, and FIG. 1C illustrates results aftercompletion of a successful auction.

As will be apparent to one skilled in the art, while the invention isgenerally described in terms of one buyer and multiple suppliers, thepresent invention may also be used in other types of electronic markets,such as auctions with multiple buyers and multiple sellers, forwardauctions having a single seller and multiple potential buyers, orelectronic exchange marketplaces.

The term “sponsor” will be utilized herein to identify the party orparties that originate the auction. In a forward auction, for example,the sponsor is typically a seller of one or more goods or services. In aforward auction, the sponsor(s) might specify a good to be sold in theauction and receive bids from parties wishing to purchase that good.Those parties wishing to purchase that good are “bidders” in a forwardauction.

In a reverse auction example, the sponsor is typically a purchaser orbuyer of one or more goods or services. In a reverse auction, thesponsor(s) buyer might specify a good desired for purchase through theauction and receive bids from parties wishing to supply that good. Thoseparties wishing to supply that good are “bidders” in a reverse auction.

In the typical supplier-bidding auction model, the bidding product orservice is defined by the sponsor of the auction. As shown in FIG. 1A,when the sponsor 10 decides to use the auctioning system of the presentinvention to procure products or services, the sponsor 10 providesinformation to an auction coordinator 20. This information may includeinformation about incumbent suppliers and historic prices paid for thebidding products or services, for example. Typically, the sponsor 10works with the auction coordinator 20 to define the bidding products andservices, and if desired, lot the products and services appropriately sothat the needed products and services can be procured using optimalauction dynamics. A specification may then be prepared for each desiredproduct or service and a Request for Quotation (RFQ) generated for theauction.

Next, the auction coordinator 20 identifies potential suppliers 30,preferably with input from the sponsor 10, and invites the potentialsuppliers 30 to participate in the upcoming auction. The potentialsuppliers are given access to the RFQ, typically through a printedpublished RFQ document, although the RFQ may be published on anidentified Website.

As shown in FIG. 1B, during a typical auction, bids are made againstlots. Generally, bidders must submit actual unit prices for all lineitems within a lot, however, the competition in an auction is based onthe aggregate value bid for lots. The aggregate value bid for a lotdepends upon the level and mix of line item bids and the quantity ofgoods or services that are offered for each line item. Therefore,although bidders may submit bids at the line item level, they arecompeting on the lot level. During the auction, the sponsor 10 cantypically monitor the bidding as it occurs. Bidders 30 may also be givensome feedback on the auction activity so that they may bidcompetitively.

Feedback about bidding activity is generally referred to as “marketfeedback” and may include any information or data related to the bidders30 or their bids, interrelationships between bids, and any other bidrelated information or data that is received before or during theauction. Market feedback may include, for example, bids that have beenplaced by other bidders, the rank of a bidder's bid in relation to oneor more other bidders, the identity of bidders, or any subset of thatinformation. Market feedback may also include non-pricing informationsuch as, for example, the quality of goods to be provided by bidders andshipping costs associated with one or more bidders. Providing suchmarket feedback to bidders in an auction helps create real-timecompetitive interaction among bidders in the auction because, withoutfeedback, bidders who are not leading in an auction might not be awareof their relative position and have less incentive to revise pricequotes and place additional competitive bids.

After the auction, the auction coordinator may analyze the auctionresults with the sponsor. In a supplier-bidding auction, the sponsortypically conducts final qualification of the low bidding supplier(s).The sponsor may retain the right not to award business to a low biddingsupplier based on final qualification or other business concerns. Asshown in FIG. 1C, at least one supply contract is usually drawn up andexecuted based on the results of the auction.

The auction is conducted electronically between bidders 30 at theirrespective remote sites and the auction coordinator 20 at its site. Inan alternative embodiment, instead of the auction coordinator 20managing the auction at its site, the sponsor 10 may perform auctioncoordinator tasks at its site.

Information is conveyed between the coordinator 20 and the bidders 30via any known communications medium. As shown in FIG. 2, bidders 30 maybe connected to the auction through the Internet via a network serviceprovider accessed, for example, through a dial-up telephone connection.Alternatively, sponsors 10 and bidders 30 may be connected to theauction by communicating directly with the coordinator 20 through apublic switched telephone network, a wireless network, or any otherknown connection method. Other methods of connecting sponsors andbidders and other communications mediums are known to those skilled inthe art, and are intended to be included within the scope of the presentinvention.

A computer software application is used to manage the auction. Thesoftware application preferably has two components: a client component31 and a server component 23. FIG. 3 illustrates a server component 23and a client component 31 resident in host computers in a firstembodiment. As is shown in FIG. 3, the server component of thatembodiment includes an operating system 24, competitive bidding eventcommunications software 26, and Internet protocol software 27. Theserver software is hosted on a computer 20 having a processor 21, randomaccess memory 22, and a data storage facility 23. The host computer 20also includes input and output devices 29 such as, for example, amonitor, printer, mouse and keyboard, and a communications interface 28for communicating with the client component 31.

The client component of the embodiment illustrated in FIG. 3 includescompetitive bidding event communication software 37, and Internetprotocol software 35. The client component software is hosted on acomputer 32 having a processor 33, random access memory 34, and a datastorage facility 36. The host computer 32 also includes input and outputdevices 39 such as, for example, a monitor, printer, mouse and keyboard,and a communications interface for communicating with the servercomponent 23.

The client component 31 is used by the bidders to make bids during theauction, and to receive and display feedback from the auction. Theclient component may, for example, be a program that is installed on abidder's computer, or it may be software that is accessed and run from aWebsite. The client component 31 preferably includes software and agraphical user interface for implementing the bid adjustment mechanismsdescribed in connection with FIGS. 5-7 below. Bids are preferably onlyable to be submitted using the client component of the application,thereby ensuring that buyers cannot circumvent the bidding process, andthat only invited bidders participate in the bidding. Each computersoftware application may be stored in a data storage device and executedby a processor such as those described in connection with FIG. 4described hereinbelow.

Bids are sent over the communications medium to, for example, theauction coordinator, or where the sponsor is performing auctioncoordinator tasks, directly to the sponsor. Bids are received by theserver component 23. The client component includes software functionsfor making a connection over the Internet, or other medium, to theserver component. Bids are submitted over this connection and feedbackis sent to connected bidders.

Although the present invention is described in terms of a servercomponent and a client component, one skilled in the art will understandthat the present invention is not limited to a client/server programrelationship model, and may be implemented in a peer-to-peercommunications model, or any other model known to those skilled in theart.

When a bidder submits a bid, that bid is sent to the server componentand evaluated to determine whether it is a valid or acceptable bid.Market feedback about received bids is sent to connected biddersenabling bidders to see changes in market conditions and plancompetitive responses.

The embodiments described herein utilize an online reverse auction,wherein the present invention is performed by a computer processor, asan example in which the present invention may be utilized. In theseexamples, suppliers bid to supply goods or services to a buyer and thebuyer typically purchases the goods or services from the lowest pricedqualified bidder. It is to be understood, however, that the presentinvention may be used in other applications. The auction does notnecessarily have to occur online, and the present invention may beperformed by other than a computer processor. The present invention mayalso be utilized in connection with auctions other than reverseauctions. For example, the present invention may be advantageouslyutilized with forward auctions, wherein the bidder offering the highestqualified bid, rather than the lowest qualified bid, is awarded thegoods or services being sold. In the case of a forward auction, the“leading bid” is the highest bid and the leading bidder is the biddermaking that highest offer, while in a reverse auction, the “leading” bidis the lowest bid and the leading bidders is the bidders making thelowest bid. Similarly, placing a “better bid” in a reverse auctionindicates placing a lower bid, while placing a “better bid” in a forwardauction indicates placing a higher bid.

FIG. 4 is a diagram illustrating an auction network 70 of the presentinvention for operating an auction, and into which the server component23 and client component 31 may be incorporated. The auction network 70may be divided into three functional sections: a client access network71, a communications network 73, and a data processing network 76. Theclient access network 71 may, for example, include one or more clientmachines 72 for accessing and communicating with the communicationsnetwork 73. The communications network 73 may include one or moreprimary communications servers 74, secondary communications servers 75,and directory, login and reporting servers 90. The data processingnetwork 76 may include production servers 77, training and reportingservers 80, reporting and training databases 86, and productiondatabases 84. The production servers 77 and training and reportingservers 80 are referred to collectively herein as bid servers 77 and 80.

The client machines 72 may be, for example, personal computers and maybe located at each bidder 30 and sponsor site 10 for accessing theauction. The client machines 72 may access the auction by, for example,connecting to a web site operated by the party hosting the auction. Theclient machines 72 may also receive software from the communicationsnetwork 73 that facilitates communications with the communicationsnetwork 73. Each client machine 72 may have a processor that executesapplicable software, and a data storage device that stores applicablesoftware and other auction data.

The primary communications servers 74 are utilized to provideinformation to bids 58 received from the client machines 72 to the bidservers 77 and 80, and to provide that bid information from the bidservers 77 and 80 to the client machines 72. The primary communicationsservers 74 may furthermore act as a firewall to prevent direct access tothe bid servers 77 and 80 by the client machines. The secondarycommunications servers 75 act as backups to the primary communicationsservers 74. The secondary communications servers 75 will perform thecommunication functions normally performed by the primary communicationsservers 74 if a failure occurs in the primary communications servers 74,thereby providing redundancy to the auction network 70.

The directory, login, and reporting servers 90 may perform a variety offunctions that may be performed by a single server or include separateservers for the various functions. The directory, login, and reportingservers 90 may include a web server that acts as a portal for access tothe auction network 70. As such, the directory, login, and reportingservers 90 will receive login requests for access to the auction network70 via, for example, the Internet. The directory, login, and reportingservers 90 may make access decisions as to whether a client machine 72is permitted to access the communications network 73. If access ispermitted, the directory, login, and reporting servers 90 will directthe client machine 72 to the appropriate portion of the auction network70. The directory, login, and reporting servers 90, may provide reportsto client machines 72. For example, information from prior auctionswhich may be utilized by sponsors 10 to make a decision as to whichbidder 30 will be awarded the sale and to permit the sponsor 10 toconsider the way in which the auction proceeded so that future auctionsmay be refined.

The production servers 77 run the bidding software that facilitates theauction process. The production servers 77 may communicate with clientmachines 72 through primary and secondary communications servers 74 and75. The production servers 77 may also be redundant so that if a failureoccurs in the production server 77 that is being utilized in an auctionevent, the redundant backup production server 77 may perform thefunctions of the failed production server 77 and, thus, prevent failureof the auction.

The training and reporting servers 80 operate in a manner similar to theproduction servers 77 and provide reports for auctions. It is useful tooperate test auctions to test the operating systems and to trainpersonnel and clients. Such testing may be performed on the productionservers 77 or, to prevent any degradation of system operation in actualauctions, one or more separate training servers may be utilized fortesting and training. Reporting may also be accomplished on theproduction servers 77 or the report creation functions may be offloadedto one or more reporting servers 80. The reporting servers 80 mayfurthermore be combined with the training servers 80.

Each server 74, 75, 77, 80, and 90 may have a processor that executesapplicable software, and a data storage device that stores applicablesoftware and data.

Data related to auctions may furthermore be held in one or more storagedevices. The data storage devices may, for example, be a magneticstorage device, a random access memory device (RAM), or a read onlymemory device (ROM). The data may include pre-auction data, post auctiondata, and data that is related to active auctions. Pre-auction data mayinclude, for example, bidders 30 that are permitted to bid on aparticular auction and the scheduled auction starting and ending times.Post auction data may include the bids and bid times received in aparticular auction and reports displaying that data in user friendlyformats. Active auction data may include data received from the bidders30 as the auction is taking place and related data such as the rank ofeach bidder 30.

The “rank” of the bidders 30 is generally determined by comparing thelowest bid by each bidder 30 and ordering the bidders 30 according tothose lowest bids. The bidder 30 ranked first is the bidder 30 that hasbid lower than any other bidder 30 in a reverse auction. The last rankmay be a rank equal to the number of bidders 30 who have submitted bidsin the auction. In the case of tie bids between bidders, the last rankmay be a rank equal to the number of unique bids by each bidder. In areverse auction based on price only, the bidder 30 having that last rankis the bidder 30 that has submitted the highest amount.

Of course, there are many known ways to calculate rank, and any of thosemay be used in connection with the subject invention, and are intendedto be within the scope of the present invention. The bidders 30 aregenerally ranked between first and last according to their lowestsubmitted bids in a reverse auction. Thus, a higher, or better rankedbidder 30 in a reverse auction is a bidder 30 who has placed acomparatively lower bid, while a higher, or better ranked bidder 30 in aforward auction is a bidder 30 who has placed a comparatively higherbid.

The bid rank may also be based on factors other than price, includingtotal value and any other factor that is useful in an auction setting.Bids may also be placed in a number of ways including, for example,absolute total value, or comparative value such as bidding in relationto an index price.

Three databases, or groupings of databases, are incorporated into theauction network illustrated in FIG. 4. The production databases 84 holddata that will be used by or is received from the production servers 77,while the reporting and training databases 86 hold data that will beused by or is received from the training and reporting servers 80.

The directory, login, and reporting servers 90 illustrated provide a webportal for the client machines 72. The directory, login, and reportingservers 90 provide an initial contact point for the client machines 72,access to auctions in which the client machine 72 is permitted toparticipate, and reports relating to active and closed auctions.

One skilled in the art will recognize that certain components of thenetwork described herein, while beneficial to an auction network, arenot necessary components in an operational auction network. For example,the secondary communications servers 75 could be removed where thebenefit of redundancy is not desired, and the primary communicationsservers 74 could be removed and the client machines 72 could communicatedirectly with the bid servers 77 and 80.

As discussed above in relation to transformation bidding, traditionalonline auctions have focused on price as the sole variable upon whichthe auction competition is based. In a typical business-to-businesssituation, however, many variables or parameters may be considered incombination with a bidder's proposed price. This is especially true inauctions for custom goods and services. For example, in the negotiationsfor a supply contract, a buyer will compare various proposals not onlyon the basis of price but also on the basis on location of the supplier,reputation of the supplier, contract term length, etc. In thesesituations, the buyer or sponsor has traditionally negotiated with eachbidder independently, as the bid prices alone do not account for theseadditional variables, and therefore cannot be readily compared.

Bids in the present auctioning system, however, may take into accountone or more factors other than price, such as quality, transportationand contract term length. These bid variables are transformed into asummarized bid when they are submitted into the auction. The summarizedbid is used as a comparative bid by the sponsor of the auction toevaluate bids. This transformation evens the playing field between allbidders bidding in a particular auction, because it takes into accountthe different cost factors. In one embodiment of the present invention,a bidder may see other bidders' summarized, comparative bids as marketfeedback.

In one embodiment of the present invention, non-price bid variables maybe broken into ranges that are scored. For example, one of the variablesin a bid may be the location of the bidder. This variable may be scoredby calculating the distance of the bidder from the sponsor of theauction. Bidders that are within a 50-mile radius of the sponsor may geta score of 10, while bidders that are within a 51-100 radius of thesponsor get a score of 9, and so forth. These scores are used by thetransformation process in calculating the comparative bid.

Each bid variable that is used in calculating the comparative bid isgiven a weight. The sponsor of the auction typically determines how mucheach variable should be considered in the comparative bid. For example,for a particular lot, the reputation of the supplier may be veryimportant to the sponsor of the auction, and be given a weight of 20%,while the actual bid price is given a weight of 80%. In this case, thereputation factor is quantified as a score. The weight of each variablemay or may not be communicated to the bidders. In addition, the weightof each bid variable may be different for different lots within anauction, or different lots within an auction may use different bidvariables.

Some of the variables that are used in the transformation process may bebased on inherent characteristics of the bidder. For example, thesponsor of the auction may want to consider the reputation of a supplierwhen comparing bids in a supplier-bidding auction. This is not avariable that can be entered by the bidder, as each bidder will likelygive itself a high rating. For these types of bid variables, the sponsorof the auction, or the auction coordinator, will typically assign valuesto the bidders before the auction to be used by the transformationprocess. These values, and the weight of these variables, may or may notbe communicated to the bidders. In addition, the sponsor or auctioncoordinator may or may not communicate to the bidder that these types ofbid variables are being used in calculating a comparative bid.

Values for other bid variables are set or entered by the bidder. Somevariables may have unchanging values, and may be set by the bidderbefore the auction or in a first bid submitted into the auction. Anexample of this type of bid variable may include the location of thebidder. For this type of bid variable, there is no need for a userinterface that allows the bidder to change the value of the variableduring the course of an auction.

However, other bid variables require a user interface that allows thebidder to adjust the value of the variable during the auction. Thesetypes of bid variables may include quantity or a characteristic of theauction products. For example, in the coal market, the characteristicsof the supplier's coal may be important to the buyer. In asupplier-bidding auction for coal, the bidder may have to input thepercentage sulfur, percentage ash and percentage water, as well as othercharacteristics, in the bid.

During the course of an auction, the bidder may want to adjust hisvalues for these bid variables, therefore, the present inventionprovides for a user interface for the bidder to input and adjust valuesfor these variables. The present invention allows for multiple variablesof a bid to be set individually. Preferably, a bidder may set differentvalues for the bid variables in each lot in an auction.

The benefit of auctions comes from the competition between bidders.Therefore, it is important that the interface the bidders use be assimple and easy-to-use as possible so bidders have no disincentives tostay competitive. In addition, bidders should have the ability toquickly change a bid in order to promote competition in the auction. Ifa bidder has to set a value for every bid variable each time he submitsa bid, he may not be able to enter bids quickly enough.

For these reasons, the present invention provides for a flexibleautomatic bid variable adjustment mechanism that allows the bidder todecide which variable(s) the software should automatically adjust whenanother variable(s) is manually adjusted. More specifically, theinventive system automatically adjusts the values of one or more bidvariables and/or the lot bid price when another bid variable and/or thelot price is adjusted, such that fixed variables do not change value.The inventive system allows the user to determine whether a variable isfixed or automatically adjustable.

As discussed in copending U.S. patent application Ser. No. 09/282,157,entitled “Method and System for Conducting Electronic Auctions withMulti-Parameter Price Equalization Bidding,” filed on Mar. 31, 1999,which has been incorporated by reference, a comparative, total bid valuecan be determined by the general formula:total bid=F(variable 1, variable 2, . . . variable n),where F is a transformation function that operates on the n variables toyield a summarized, comparative bid value, herein called the “totalbid”.

For example, consider an auction where the bidders enter both a bidprice and a bid quantity as part of the bid. In this case, the total bidprice function may be expressed as:total bid=F(bid price, bid quantity).One example of such a formula is simply:total bid=(bid price×bid quantity)Using this example, in one particular bid, a bidder may have the priceset to $1000 and the quantity set to 100. In this case, the total bidvalue would be ($1000×100), or $100,000. In this example, United Statesdollars are used for the currency, however any units of currency may beused. Alternatively, the price may be set in dollars per unit ofmeasurement. For example, the price may represent dollars per barrel ofoil, and where quantity is measured in barrels of oil.

From the above total bid price function, the equation for calculatingone of the bid variables from the total bid and the other bid variablescan be calculated. Using the general formula given above, the value ofbid variable 1 can be expressed as:variable 1=F2(total bid, variable 2, variable 3 . . . variable n)Using the example above where bidders enter both a bid price and a bidquantity, the quantity variable of a bid can be determined from thetotal bid value and bid price are, as shown:bid quantity=F2(total bid, bid price)Using the specific example given above where total bid=(bid price×bidquantity), the formula for calculating the bid quantity may be expressedas:bid quantity=(total bid/bid price)

The system of the present invention uses these functions to enable thebidder to set the automatic adjustment value for some variables to beeither “fixed” or “adjustable”, manually adjust another variable andhave the system automatically adjust the variables for which theautomatic adjustment value is “adjustable”. This feature chooses theappropriate function (F, F2, etc.) to calculate the value of the bidvariables that are automatically adjusted by the system.

Using the example above wherein the bid has bid quantity and bid pricevariables, a bidder may set the automatic adjustment value for the totalbid for a lot to “fixed”, and the automatic adjustment value for the bidquantity to be “adjustable”. When the bidder adjusts the bid price, thebid quantity is automatically adjusted. The system uses F2 from theequations above to calculate the new value for the bid quantity. Usingthe specific example above, bid quantity is calculated by the formula:bid quantity=(total bid/bid price)If the bidder has the total bid for a lot set at 100,000 and adjusts thebid price to $500, a new value for bid quantity is calculated by:bid quantity=(100,000/500)=200By automatically adjusting the bid quantity, the total bid for a lot ismaintained. This may be important for a bidder who wants to maintainbetter control of internal needs like capacity and delivery strategy.

Alternatively, the bidder may “fix” the value of the bid quantityvariable, and allow the total bid to be automatically adjustable. Whenthe bidder adjusts the bid price in this case, the bid quantity remainsthe same, but the total bid value for the lot is automatically adjusted.The system uses F from the equations above to calculate the new valuefor the total bid. Using the specific example above, the value of thetotal bid is calculated by the formula:total bid=(bid price×bid quantity)If the bidder has the bid quantity set at 200 and adjusts the bid priceto $400, a new value for the total bid is calculated by:total bid=($400×200)=$80,000By automatically adjusting the total bid, the bid quantity for a lot ismaintained. This allows a bidder to be more aggressive in the market byeasily and quickly changing his total bid value by only adjusting thebid price.

In one embodiment, the sponsor or the auction coordinator determineswhich bid variables can be automatically adjusted. In anotherembodiment, the automatic bid variable adjustment mechanism isimplemented by giving the bidder the ability to set the automaticadjustment of the bid variables and/or the total bid price for a lot.

Bidders may be given the option of setting the automatic adjustmentvalue for certain bid variables before the auction begins. Additionally,bidders may be provided with a user interface for changing the value ofthe automatic adjustment for each adjustable bid variable and the totalbid price. During the auction, the bidder can re-evaluate the automaticadjustment of the bid variables and change if necessary in response tomovement in the market, or for other reasons.

In this manner, the automatic bid variable adjustment mechanism of thepresent invention allows bidders to rapidly adjust bids in response tomarket activity.

An example of a user interface that may be used to set the automaticadjustment value for the bid variables is shown in FIGS. 5A-5F. As shownin this example, each bid variable and the total bid are given radioboxes 511, 512, 515, 516, 521 and 522 for the user to set this value. Aswill be obvious to those skilled in the art, other interfaces may beused, such as pulldowns, menu bars and the like.

In the embodiment of the present invention shown in FIGS. 5A-5F, theuser may set only one variable or the total bid to be “adjustable”. Asshown in FIGS. 5A-5F, the bidder may use automatic bid adjustment radiobuttons 512, 516 and 522 to set one of the bid variables or the totalbid value to be automatically adjustable. FIGS. 5A-5C illustrate thefirst above example, wherein the bid quantity is automaticallyadjustable, as shown by radio button 522. FIG. 5A shows the bid beforethe bidder changes the bid price to 500. FIG. 5B shows the bidderchanging the bid price 530 to 500. When the bidder presses the <Enter>key after typing in the new bid price value, the bid quantity 535 isautomatically adjusted to 200 so that the total bid value 505 of 100,000is maintained, as shown in FIG. 5C. In an alternative embodiment, theautomatic adjustments are not calculated until the user clicks the OKbutton 540.

FIGS. 5D-5F illustrate the second example discussed above, wherein thetotal bid is automatically adjustable, as shown by radio button 512.FIG. 5D shows the bid before the bidder changes the bid price to $400.FIG. 5E shows the bidder changing the bid price 530 to $400. When thebidder presses the <Enter> button, the total bid value 505 isautomatically adjusted to 80,000 so that the bid quantity 535 of 200 ismaintained, as shown in FIG. 5F.

Although in the example given above the function used to transform bidvariables into a total bid value is linear, it will be obvious to oneskilled in the art that any type of function, or combination offunctions, may be used to transform bid variables.

In one embodiment of the present invention, the bidder may set a maximumand/or minimum value for the automatic bid adjustment of a bid variable.In this embodiment, the bid variable may not be automatically adjustedto be more (or less) than this value. This will prevent bidders fromaccidentally changing bid variables to uneconomic levels or such thatthey do not conform to internal corporate guidelines. Alternatively, thesystem may set a maximum and/or minimum automatic adjustment values fora bid variable. This will prevent other bidding errors, such as biddinga negative quantity. As an additional check, the system may enforceautomatic bid adjustment rules. For example, an auction may have abidding rule whereby only one bid variable is allowed to beautomatically adjustable at a time. In another embodiment of the presentinvention, only certain bid variables may ever be automaticallyadjustable. Other checks are known to those skilled in the art and areintended to come within the scope of the present invention.

Although the example given above used two bid variables, the automaticbid variable adjustment mechanism of the present invention may beimplemented for bids that have more than two variables. As discussedabove, in one embodiment, the bidders may be constrained to having onlyone variable or the total bid value adjustable at a time. That is, thesoftware may not allow the bidder to set more than one variable to beautomatically adjustable simultaneously in this embodiment. In anotherembodiment, the bidder may allow the system to automatically adjust anynumber of variables, and the system distributes the automatic adjustmentacross all “adjustable” variables. The automatic adjustment distributionin this case may be pro rata. Alternatively, the system or the biddermay define a formula for the automatic adjustment distribution. Forexample, the bidder may select a primary automatic adjustment bidvariable and a secondary automatic adjustment bid variable. In thiscase, the secondary bid variable will only be automatically adjusted ifthe primary bid variable has reached a maximum or minimum value. Othervariations will be obvious to those skilled in the art, and are intendedto come within the scope of the present invention.

As discussed above, in one embodiment of the present invention, certainvariables or the total bid may not be allowed to be automaticallyadjusted. In this case, the user will not be given the ability to setthe automatic adjustment of these variables and any variable that cannotbe automatically adjusted will not have the radio buttons.

For instance, suppose in the above example, a third bid variable,contract length, is used when calculating the total bid, and thisvariable may not be automatically adjusted. The bid entry screen maylook like FIG. 6, wherein the “contract length” variable 545 does nothave an automatic adjustment radio button.

In another embodiment of the present invention, a bid adjustmentconfiguration button 710, 711 may be used in the bid entry userinterface 500 instead of radio buttons, as shown in FIG. 7A. In thisembodiment, when a bidder clicks on the bid adjustment configurationbutton 710, 711, a separate interface (shown in FIG. 7B) is presented tothe bidder so that the bidder can configure bid variables to beautomatically adjustable or fixed. Preferably, the user can setadditional bidding configurations in this interface as well.

This configuration interface is preferably used in connection with bidadjustment buttons 720, 721, as disclosed in copending United Statespatent application, “Method and System for Configurably Adjusting a Bidin an Online Auction”, filed concurrently herewith, which is herebyincorporated by reference.

An example of a bid adjustment configuration interface that may bedisplayed to bidder after the bidder clicks on the bid adjustmentconfiguration button 710 for bid price is shown in FIG. 7B. As shown inthis example, the bidder has the ability to set a bid variable to beautomatically adjustable with buttons 730, 735, as well as set the type737, 738 and value 750, 751 of adjustment when using the bid adjustmentbuttons 720, 721. In this embodiment, a similar interface is shown forsetting the configuration of the bid quantity bid variable. In analternative embodiment, the bid entry window has only one bidconfiguration button, and the bid configuration window allows the userto set all configuration options for all bid variables.

As will be apparent to one skilled in the art, there are many variationsof user interfaces that can be used to allow the user to set bidvariable to be automatically adjustable. A few examples are given here,but the scope of the present invention is intended to cover anyvariation of user interface that allows for the automatic adjustment ofbid variables.

As another example, a particular auction may be a Net Present Value(NPV) auction, wherein bids are adjusted to a Net Present Value beforebeing compared. NPV auctions are discussed in greater detail inco-pending application Ser. No. 09/282,056, entitled “Method and Systemfor Conducting Electronic Auctions with Net Present Value Bidding”,filed Mar. 31, 1999, the disclosure of which is hereby expresslyincorporated in the present application.

Generally, NPV bidding enables the creation of flexible auctions inwhich bidders can submit bids involving different cash flows over time.In such an auction, the bid variables discount rate and contract period,for example, may be automatically adjusted using the system of thepresent invention.

As will be obvious to one skilled in the art, the automatic bidadjustment mechanism of the present invention may be used for anyparameter of a bid. As will also be obvious to one skilled in the art,the use of buttons is not required, and any type of interface, such as adepression of particular key(s) on a keyboard, depression of a mousebutton and/or voice-recognition software, may be used forincrementing/decrementing in accordance with the present invention.

1. A system for facilitating an auction, comprising: a processorconfigured to: receive a plurality of bid variables from a bidder,wherein at least one bid variable is designated as a fixed variable andwherein at least one bid variable is designated as an adjustable bidvariable; determine an initial total bid value for the bidder based atleast in part on the received bid variables; receive at least onesubsequent bid variable from the bidder; and adjust the total bid valuefor the bidder in accordance with the received subsequent bid variableand one or more rules governing the adjustment of bid variablesdesignated as adjustable bid variables; and a memory configured to storethe one or more rules and configured to provide the processor withinstructions.
 2. The system of claim 1 wherein the at least one bidvariable designated as fixed is designated as fixed by a sponsor of theauction.
 3. The system of claim 1 wherein the at least one bid variabledesignated as adjustable is designated as adjustable by a sponsor of theauction.
 4. The system of claim 1 wherein the at least one bid variable.designated as fixed is designated as fixed by the bidder.
 5. The systemof claim 1 wherein the at least one bid variable designated asadjustable is designated as adjustable by the bidder.
 6. The system ofclaim 1 wherein the at least one bid variable designated as fixed isdesignated as fixed by the bidder and is subsequently designated asadjustable by the bidder.
 7. The system of claim 1 wherein the at leastone bid variable designated as adjustable is designated as adjustable bythe bidder and is subsequently designated as fixed by the bidder.
 8. Thesystem of claim 1 wherein the one or more rules include a rule thatspecifies a minimum value for a bid variable.
 9. The system of claim 1wherein the one or more rules include a rule that specifies a maximumvalue for a bid variable.
 10. The system of claim 1 wherein at least oneof the bid variables in the plurality of bid variables describes aninherent characteristic of the bidder.
 11. The system of claim 1 whereinthe fixed variable can be manually adjusted by the bidder.
 12. Thesystem of claim 1 wherein the adjustable variable can be automaticallyadjusted by the system.
 13. The system of claim 1 wherein the one ormore rules include a rule that allows a bidder to predefine an automaticadjustment value for a bid variable prior to the start of the auction.14. The system of claim 1 wherein the one or more rules include a rulethat only one bid variable may be automatically adjusted at a time. 15.The system of claim 1 wherein the one or more rules include a rule thatmultiple bid variables may be automatically adjusted at a time.
 16. Amethod for facilitating an auction, comprising: receiving a plurality ofbid variables from a bidder, wherein at least one bid variable isdesignated as a fixed variable and wherein at least one bid variable isdesignated as an adjustable bid variable; determining, using aprocessor, an initial total bid value for the bidder based at least inpart on the received bid variables; receiving at least one subsequentbid variable from the bidder; and adjusting the total bid value for thebidder in accordance with the received subsequent bid variable and oneor more rules governing the adjustment of bid variables designated asadjustable bid variables.
 17. The method of claim 16 wherein the one ormore rules include a rule that allows a bidder to predefine an automaticadjustment value for a bid variable prior to the start of the auction.18. The method of claim 16 wherein the at least one bid variabledesignated as fixed is designated as fixed by the bidder and issubsequently designated as adjustable by the bidder.
 19. The method ofclaim 16 wherein the adjustable variable can be automatically adjustedby the system.
 20. A computer program product for facilitating anauction, the computer program product being embodied in a tangiblecomputer readable medium and comprising computer instructions for:receiving a plurality of bid variables from a bidder, wherein at leastone bid variable is designated as a fixed variable and wherein at leastone bid variable is designated as an adjustable bid variable;determining, using a processor, an initial total bid value for thebidder based at least in part on the received bid variables; receivingat least one subsequent bid variable from the bidder; and adjusting thetotal bid value for the bidder in accordance with the receivedsubsequent bid variable and one or more rules governing the adjustmentof bid variables designated as adjustable bid variables.